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The stock market and economy have parted ways

washingtonpost.com

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Re: The stock market and economy have parted ways

#41

Post by throwaway_USD »

JumpCrisscross wrote: post #23
hitpointdrew wrote: post #20

> “I’m not sure what will trigger a sustained sell-off in stocks, but surging [virus] infections and another round of more business closures will be difficult for investors to ignore much longer.” An alternative place to put investments will trigger it. When your options are savings accounts paying 0.25% interest, and treasury notes paying nothing, and CD's being garbage, what are your alternatives for investing? If…

Given the retail drive of this rally, bills coming due could have a similar effect.

This is the most sane thing anyone can say.

At some point there is going to be a critical mass of people not paying their mortgage, not paying rent, not paying loans, not paying credit cards...and simply no money and unemployment.

I think this week we will begin to see some acknowledgement of the realities because July 15 is the new tax return date, and I think there will be millions and millions of American's who just say F it, I am not filing/paying taxes.

Then again it also wouldn't surprise me if 10s of millions end up homeless before the end of the year while politicians keep parading around unemployment numbers and the stock market record highs, while these people get swept under the rug and never actually acknowledged.

Re: The stock market and economy have parted ways

#42

Post by FooBarWidget »

hitpointdrew wrote: post #20

> “I’m not sure what will trigger a sustained sell-off in stocks, but surging [virus] infections and another round of more business closures will be difficult for investors to ignore much longer.” An alternative place to put investments will trigger it. When your options are savings accounts paying 0.25% interest, and treasury notes paying nothing, and CD's being garbage, what are your alternatives for investing? If…

But then why did the stock market perform so badly for so long during 2008?

Re: The stock market and economy have parted ways

#43

Post by beamatronic »

danhak wrote: post #38
hitpointdrew wrote: post #20

> “I’m not sure what will trigger a sustained sell-off in stocks, but surging [virus] infections and another round of more business closures will be difficult for investors to ignore much longer.” An alternative place to put investments will trigger it. When your options are savings accounts paying 0.25% interest, and treasury notes paying nothing, and CD's being garbage, what are your alternatives for investing? If…

This trope gets repeated over and over but it just makes no sense. Volatility is risk. What rational investor says "interest rates are too low, I MUST deploy my capital into a market that is seeing wild 30% gyrations from month to month instead of parking it safely while this global crisis plays out."

An investor who fears missing out on 30% gains.

Re: The stock market and economy have parted ways

#44

Post by tomp »

benmanns wrote: post #27
currymj wrote: post #18

concretely, how much does the sentiment of retail investors actually matter to prices -- in general for the whole market, and for specific stocks that dumb retail investors get excited about (Tesla, Hertz, or whatever)? I have no idea what the answer to this question is or even how to formulate it in a clear, answerable way. But it seems very important! It seems that stock prices move, newspapers publish a narrative…

I don't know how useful these are, but I found 428k+ Robinhood users hold some position in TSLA: https://robintrack.net/symbol/TSLA 50%+ is held by institutions: https://www.nasdaq.com/market-activity/stocks/tsla/instituti...

Probably a fake number. It seems Robin Hood is available in the US (330m population) and UK (66m population).

Re: The stock market and economy have parted ways

#46

Post by SpicyLemonZest »

jjoonathan wrote: post #34
SpicyLemonZest wrote: post #12

"FOMO" makes an entirely natural market process sound problematic. If an investor is confident that the economy will fully recover in 2022, they should be willing to buy stock at a very slight discount from fully recovered today, even if current economic conditions aren't great. That's not a psychological trap, just an efficient market.

Something can be both rational and problematic.

Certainly, but I'd argue the problem is entirely with people's expectations. Stock market indexes were never an appropriate tool to measure current economic health. If we want a numeric tool to measure what things are like right now, we have to build one, because yelling at the S&P 500 to whip it into shape won't work.

Re: The stock market and economy have parted ways

#48

Post by toomuchtodo »

throwaway_USD wrote: post #41
JumpCrisscross wrote: post #23

Earlier quoted context omitted.

Given the retail drive of this rally, bills coming due could have a similar effect.

This is the most sane thing anyone can say. At some point there is going to be a critical mass of people not paying their mortgage, not paying rent, not paying loans, not paying credit cards...and simply no money and unemployment. I think this week we will begin to see some acknowledgement of the realities because July 15 is the new tax return date, and I think there will be millions and millions of American's who ju…

$600 federal unemployment top up ends July 31st. PPP and other paycheck guarantee program layoff moratoriums end at the end of September. I expect carnage in October. United Airlines has already stated they are targeting ~36k job cuts in October when they're permitted to [1] [2], I presume other airlines and businesses will follow.

[1] https://www.usatoday.com/story/travel/airline-news/2020/07/0...

[2] https://www.flightglobal.com/strategy/layoffs-expected-when-...

Re: The stock market and economy have parted ways

#49

Post by hpkuarg »

marktangotango wrote: post #29
3pt14159 wrote: post #13

Earlier quoted context omitted.

It means a massive crash is coming. Money printer go brrr is funny, but it's not capable of propping up the entire market forever. There's a flight to safety that happens when countries really start printing.

I echo this sentiment, but when all major central banks are printing? And the Fed is buying equities? There's some sort of brinksmanship going on that I find highly disturbing. Also seems like there's a large amount of will to keeping the party going indefinitely.

The Fed isn't buying equities. You could maybe argue that the bond ETFs that the Fed bought are "equities", but they aren't really. They're just working to keep interest rates low across the board, from the federal funds rate up to corporate bonds.

Re: The stock market and economy have parted ways

#50

Post by ed25519FUUU »

secondcoming wrote: post #25
hitpointdrew wrote: post #20

> “I’m not sure what will trigger a sustained sell-off in stocks, but surging [virus] infections and another round of more business closures will be difficult for investors to ignore much longer.” An alternative place to put investments will trigger it. When your options are savings accounts paying 0.25% interest, and treasury notes paying nothing, and CD's being garbage, what are your alternatives for investing? If…

I'm no gold bug, but turn some of your cash into gold.

I go back and forth on gold a lot. I keep a very small amount of my money in gold, but I’m literally thinking “if things really get down to it, I can trade this for food”

But that type of mental exercise does not work well for many people. Especially imagining a system where our fiat currency is effectively useless.

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